The New Zealand dollar seemed little affected by the Reserve Bank's interest rate cut yesterday morning.
Reserve Bank Governor Alan Bollard yesterday cut the official cash rate (OCR) by a quarter of a percentage point to 5.25 per cent in an effort to shore up "fragile" confidence and prevent a "hard" economic landing.
The cut was universally expected by economists, the more optimistic of whom had forecast a half percentage point cut.
Asked what was the effect of the rate cut on the New Zealand dollar , ANZ Investment Bank senior dealer Mark Elliott replied: "None whatsoever."
"It was pretty much anticipated by the FX market that it was going to be a 25 basis point cut," Mr Elliott said.
' 'A 50 basis point cut might have been the catalyst for a bit of a dip in the kiwi but it was not to be."
Mr Elliott said the kiwi had "held up rather well" yesterday and was trading more off what the Aussie and the euro were doing relative to the US dollar "as has been the usual case in recent months".
By 5pm yesterday the kiwi was at US58.17c, compared with US58.02c last night after trading in a "very quiet, very narrow range" of US58.03c to US58.23c.
Mr Elliott expected to see the kiwi trade in a US58c to 58.5c range last night.
However, he said the kiwi's recent gains may not last.
"It looks like this recent run up is running out of steam. There seems to be a loss of momentum. It's going up, but it's going at an increasingly slower rate."
Meanwhile the aussie was at US66.27c at 5pm in Wellington compared with US66.02c at 5pm on Wednesday, the euro eased to US$1.1655 from US$1.1747 on Wednesday, while the US dollar was at 118.58 yen (119.14).
On the crosses at 5pm the kiwi was buying A87.79c (A87.82c on Wednesday), 68.99 yen (68.97), 0.3569 pence (35.54), 0.7663 Swiss francs (0.7612), and 0.4980 euro (0.4947).
The monetary conditions index was at plus 213 (190), the trade-weighted index was at 61.69 (61.47) and 90-day bank bill yields were at 5.25 per cent (5.21).
On the debt market, February 2005 yields were at 4.91 per cent (4.86), November 2006s were at 4.98 per cent (4.95), and November 2011s were at 5.34 per cent (5.31).
- NZPA
<I>Currency:</I> Kiwi little affected by rate cut
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